Marketplaces and platforms
Assign each seller or merchant a unique vIBAN. Buyers pay the vIBAN directly; the platform reconciles receipts to the correct merchant account and schedules payouts — without manual intervention.
Two IBAN types dominate modern payment infrastructure: the virtual IBAN (vIBAN), a routing reference that sits under a master account and enables scalable reconciliation without separate balances; and the dedicated IBAN, an account number that belongs exclusively to one holder with its own segregated balance. Understanding which to use — and when — is essential for PSPs, marketplaces, neobanks, and any business building on European payment rails.
A virtual IBAN (vIBAN) is a valid, fully formatted IBAN that routes incoming payments to a master or pooled account held at a licensed bank or e-money institution. The vIBAN itself is not backed by a separate balance — instead, the issuer's ledger records which vIBAN received each credit and applies it internally to the correct sub-account or customer record.
From a payer's perspective, a vIBAN is indistinguishable from any other IBAN. The payer enters it in their banking app, triggers a SEPA or SWIFT transfer, and the funds arrive. Behind the scenes, the receiving institution matches the credited vIBAN to an internal reference and fires a webhook or API event to the platform that issued it.
This architecture is the cornerstone of virtual IBAN platforms. A single master account can have thousands — or millions — of vIBANs sitting underneath it, each uniquely assigned to a client, invoice, project, or transaction. Reconciliation is automatic: no bank statement parsing, no manual matching.
A dedicated IBAN — sometimes called a local IBAN or personal IBAN — is an account number that belongs exclusively to one account holder. It has its own distinct balance on the issuer's core ledger, appears in the holder's name in payment directories, and is fully segregated from all other accounts at the institution.
When a business or individual opens a payment account with a bank or EMI, they receive a dedicated IBAN. That IBAN is theirs: they can receive and send payments, view their own statement, and the account balance is legally distinct from the funds of any other customer. This is the model used by traditional current accounts, neobank consumer accounts, and corporate payment accounts.
| Dimension | Virtual IBAN (vIBAN) | Dedicated IBAN |
|---|---|---|
| Account ownership | Routes to a master/pooled account; no independent balance | Belongs exclusively to one account holder; own balance |
| Balance segregation | Funds co-held at master account level; sub-ledger attribution only | Fully segregated balance — legally attributed to the holder |
| Settlement | Credits enter master account; issuer distributes internally | Credits settle directly into the holder's own account |
| Reconciliation | Automatic — each vIBAN is a unique reference; no manual matching needed | Standard bank statement reconciliation per account |
| Issuance speed | Real-time via API (sub-second); no new bank account creation required | Requires account opening; typically seconds to minutes via modern API |
| Scalability | Very high — millions of vIBANs from one master account | Moderate — each IBAN requires a distinct account record |
| Outgoing payments | Usually via master account; individual vIBANs typically receive only | Full send & receive — holder controls outbound transfers |
| Regulatory treatment | Funds pooled; issuer must safeguard aggregate master balance | Individual safeguarding per account; cleaner for regulated e-money |
| Typical cost | Low per-IBAN cost; billed per issuance or monthly volume | Higher per-account cost; full KYC and account infrastructure overhead |
| Primary use cases | Marketplaces, PSPs, collection accounts, invoice payments, reconciliation | Neobanks, corporate accounts, individual business accounts, salary payments |
Virtual IBANs are the right tool whenever you need to collect payments at scale and identify the payer automatically. The reconciliation benefit is the core value proposition: instead of asking all payers to include a reference in a payment remark (which is error-prone), each payer is assigned a unique IBAN that unambiguously identifies them.
Assign each seller or merchant a unique vIBAN. Buyers pay the vIBAN directly; the platform reconciles receipts to the correct merchant account and schedules payouts — without manual intervention.
PSPs issue vIBANs to each merchant they serve. When end customers pay the merchant, the PSP's platform matches the vIBAN to the merchant record and credits their sub-wallet automatically.
A holding company issues vIBANs per subsidiary, cost centre, or project. All inbound funds pool in one master account; the vIBAN reference automatically allocates each receipt in the ERP system.
Each invoice is assigned a one-time vIBAN. When payment arrives the invoice is automatically marked paid — no remittance information matching required. Unused vIBANs can be expired after a set period.
Loan disbursements and repayments can each use a vIBAN to ensure funds from one borrower are never confused with another. The same model applies to escrow accounts in property transactions.
Exchanges and crypto wallets assign each user a unique vIBAN for fiat deposits. When SEPA funds arrive the vIBAN maps directly to the user's crypto wallet, triggering the buy or credit automatically.
Dedicated IBANs are the right tool when the account holder needs their own named account with a distinct balance and full bidirectional payment capability. This is the model for any product that resembles a bank account from the customer's perspective.
Each customer receives their own dedicated IBAN in their name. They receive salary, pay bills, and send transfers directly from their own balance — the experience mirrors a traditional current account.
A business opening an account for operational use — paying suppliers, receiving client invoices, running payroll — needs a dedicated IBAN in the company's name, not a reference under someone else's master account.
Some regulated products — client money accounts for law firms, broker client funds, trust accounts — legally require each client's funds to be held in a separately identified account, not pooled. A dedicated IBAN satisfies this requirement; a vIBAN may not, depending on the jurisdiction and regulator.
Employees receiving wages via SEPA expect a named account they own. White-label employee benefit or expense card programmes pair a dedicated IBAN with a debit card, giving each employee a personal payment account.
Codego issues both virtual IBANs and local/dedicated IBANs through its Banking-as-a-Service platform. Coverage spans 15 countries — including France, Spain, Germany, the United Kingdom, the United States, Canada, Australia, and several more — with SEPA, SEPA Instant, and SWIFT connectivity across 21 currencies.
Whether you are building a marketplace that needs millions of vIBANs for automated reconciliation, or a neobank that wants to give each customer their own named account, both are available from a single API integration. KYC is handled in-platform via Codego's IBAN issuance infrastructure — including real-time issuance, webhook notifications on receipt, and full transaction history per IBAN.
A common architecture used by Codego partners combines both models: the platform's master account holds the float, virtual IBANs handle inbound collection from thousands of end clients, and dedicated IBANs are issued to clients who need a named account for outbound payments or regulatory compliance purposes.
Both vIBANs and dedicated IBANs can be issued by licensed EMIs and banks under EU/EEA frameworks (PSD2 and the EMI Directive). However, the safeguarding obligations differ in practice.
For virtual IBANs, the master account holder (typically the platform operator) is the regulated entity responsible for safeguarding the aggregate pooled balance. End-user funds are protected at the master account level; the vIBAN is an internal routing construct, not a regulated account in its own right. This is acceptable for platforms that maintain the sub-ledger and accept responsibility for distributing funds correctly to end users.
For dedicated IBANs in a white-label neobank context, the EMI issues the account to each end user directly. Each user's balance is individually safeguarded. This offers stronger individual protection and is generally required where the end user interacts with the account as their own payment account under PSD2 consumer protections.
The IBAN Discrimination Rule applies to both types: no SEPA-area payee or employer may refuse a valid SEPA IBAN on the grounds that it is not a domestic one. Virtual IBANs issued under, say, a French or German BIC must be accepted by any eurozone counterparty.
Issue virtual IBANs at scale via API — real-time issuance, SEPA/SEPA Instant/SWIFT, webhook reconciliation, 15 countries.
End-to-end guide to how IBANs are generated, registered, and linked to payment rails in the EU.
Real-time European payments and the 2024 EU mandate — the rail that both vIBANs and dedicated IBANs use.
The full BaaS stack: IBANs, card issuing, core banking, compliance — one integration.